Expert Tips for Negotiating a Boat Purchase

Navigate the complexities of negotiating a boat purchase with our in-depth guide. Understand what constitutes a good deal, how to handle price negotiations, buyer’s provisions, mechanical and marine inspections, sea trials, deposits, and finalizing the sale.

Ensure a smooth and successful boat buying experience.

What Is a Deal?

Before we get into the Top 7 Secrets to Successfully Sell Your Used Boatirresistible secret techniques you will use to negotiate the terms of a sale and lure the buyer into paying top dollar for your boat, let’s take a few minutes to examine the elements of a deal.

Strictly speaking, the elements of a deal are:

1. an offer;
2. acceptance;
3. and consideration, or “consideration” being legalese for moola.

The resulting deal is a legal contract between you and the buyer, an agreement on the terms and conditions by which you are willing to transfer ownership of your boat to the buyer.

Bear in mind that a deal requires that you and the buyer reach an agreement. To make a deal, you must seek out the terms and conditions whereby both you and the buyer are willing to make the trade. A deal cannot be forced upon one party by the other. A person unwilling to make the deal cannot be made into a willing participant in a deal. A person who does not understand the deal cannot be a willing participant in a deal. A minor cannot be a participant in a deal, because nothing he or she says counts.

Along these same lines, you cannot cheat or trick someone into an agreement. If the buyer is confused about the terms of the deal, you and the buyer cannot be in agreement. If the buyer is given false pretenses or false information, then it is impossible for him to be in agreement with you, and you do not have a deal. If you do try to make a deal based on false pretenses or false information, you may be creating your own personal time bomb.

You may have heard that a contract does not have to be written on paper and signed to be legal. That, however, is for all intents and purposes an interesting bit of trivia of no practical value:

• if you do not write down all of the terms of your deal at the time you and the buyer reach an agreement;
• and if it so happens that your memory turns out to be less than perfect;
• or if it happens that the buyer’s memory turns out to be less than perfect;
• and if the terms of the deal that you two are later able to recall do not coincide;

then you two do not have a deal. That’s a lot of “ifs” strung together, in case you didn’t notice.

Chances are that if you do not write the terms of your deal down at the time of the agreement, at least one of those ifs will come to pass. It can get very sloppy if money has changed hands and later on the two of you cannot agree on the terms of the deal, or even the amount of money that was involved. You could end up looking like one of those people that appear on those made-for-television courtroom shows.

Speaking of legality, never go into a deal believing that you are going to seek enforcement of your deal through the court system by way of a lawsuit. Forget it. You need to adopt another way of thinking about the transaction, i. e., you need to structure the deal in such a way that you are in control of your destiny all the way through. The buyer should be thinking the same way, but he will have to read his own book to learn this. I’ll be making recommendations for you along these lines throughout this article.

Negotiations

Okay, now you know that I’m not going to recommend that you attempt to deceive the buyer, because that would not permit you to have a willing agreement with him. Still, that leaves a lot of room for persuasion and advocacy.

To get the buyer into negotiation, you first need to establish that he wants the boat on some kind of terms. This can be straightforward and simple, or a little more complicated depending on the kind of person you are dealing with. After you have made your sales presentation the buyer may just stick out his hand and say:

“I’ll take it!”

I hate it when that happens, because I’ll always wonder how much more I could have charged for the boat and still sold it to him.

Or the buyer may indicate in some way that he is interested in buying the boat on some kind of terms, in effect opening negotiations. Then again the buyer may come right out and make you an offer, which definitely opens negotiations.

Price

The thing about price is that once you go down, you can’t go back up again. If you even hint at a price lower than your asking price, that price becomes your new asking price for the boat.

Before you get into How to Choose the Best Selling Price for Your Boatprice negotiation, try to get every other issue settled. The buyer may want you to repair something on the boat, throw in some accessories or store the boat for him for a while, whatever. Do what you can to discover all of the buyer’s terms before you get into price. While you’re at it, be sure that the buyer understands that you expect him to leave a deposit to seal the deal, today, if and when you can come to terms.

The reason for leaving the price for last is that you do not want to drop the price, only to discover that it was the first of seven other concessions the buyer wants to negotiate! You also don’t want to drop the price, only to find out that the buyer was just trying you out to see what you might be willing to do.

When the time does come to start talking dollars, instead of immediately lowering your price, try to get the buyer to pay your asking price by offering him something extra. During your earlier discussions, for example, you may have discovered something that the buyer considers important and that you are in a position to provide. Maybe it’s a full tank of gas, a nice radio or an accessory. Maybe he mentioned an addition or modification to the boat that he thinks would be nice to have.

Since he is unfamiliar with the boat, he may not know what is involved in getting it done – who to hire, where to get parts, etc. But since you know all about your boat you may be able to have it taken care of without too much trouble. Similarly, you may find that the buyer is interested in receiving some instruction in using the boat, particularly in the case of sailboats. The buyer may be willing to pay more if you offer to deliver the boat to his home location. Explore these kinds of issues to find out what kind of opportunities you might have.

What’s the least you will take for it?

Once you offer your boat for sale, it is really up to the buyer to accept your offer or make a counter-offer. A lot of buyers don’t understand this though, so they might try to negotiate the price down by asking you for your lowest price, saying something like:

“What are you willing to take for it?”

While that is a perfectly reasonable question, it is not in your best interest to answer it directly. What you do is tell them politely, still smiling, that you think the boat is fairly priced considering the superb condition it is in. You are, however, very interested in hearing any reasonable offer that he would care to make. Then you can say to him:

“Oh, by the way. How much do you think it is worth, now that you have seen it for yourself?”

Note that it is very important to get the buyer to express an interest in buying the boat. If you can, get him to make some kind of offer for the boat, as long as it’s in the ballpark. Once a buyer does that, he has made it clear that he wants the boat; a major threshold you want him to cross in your negotiations. Once a buyer makes a reasonable offer for the boat, he can no longer dilly-dally around pretending he isn’t sure whether he wants it or not.

The rule is that the buyer’s offer is valid until either you reject it outright, give him a counter-offer or he retracts it. While you are thinking about his offer, it is okay to ask for some clarification. You might want to cordially ask him why he doesn’t think the boat is worth your asking price. Sometimes the buyer will point out some interesting fact about the competition in the local market. Sometimes he will simply admit that he is just testing you to see what you will take.

How much ground should you give on price? In the chapter on pricing your boat, I suggested you leave 5 to 10 percent for negotiation. In fact, I don’t think you should ever lower the price during negotiations with a buyer more than 10 percent. Doing so is like running a private clearance sale for the benefit of the one buyer who is standing in front of you.

Buyer’s Provisions

What follows is a list of terms and conditions that a buyer may want you to include in your deal. The seller would not normally introduce any of these items into the deal himself.

Buyer’s Final Inspection

Buyers may request the right to conduct a final inspection of the boat at the time of closing. This allows them to assure themselves that the boat is in the same condition it was when they decided to buy it, and that all of the agreed accessories and equipment are present.

While this might seem reasonable at first glance, the problem with a final inspection is that the buyer may try to use it to wiggle out of the deal if he has developed cold feet. Maybe he’s decided he should have offered less money. Maybe his buddy at work has given him an earful about how he offered too much and could have saved a bunch of money by going with another boat. Blah, blah, blah. For whatever reason, the buyer gets cold feet and starts looking for a way to get out of the deal and get his deposit back. He may raise fictitious issues at the final inspection and try to call the deal off.

In the event a buyer requests that you include a final inspection clause in your agreement, you should include a couple of provisions of your own to make sure things don’t get out of hand. For example, include the term “undisputed” in the provision, to indicate that only a problem on which the two of you agree can be used to hold up the deal. If the outboard happens to get stolen, or if there is a new crunch on the side of the boat, there isn’t any room for disagreement between the two parties that the boat has indeed materially deteriorated since the deal was made. If, however, the buyer suddenly decides that a little cracking in the gel coat is now a deal breaker, you have the means by which to say no.

Read also: Master the Psychology of Selling Your Boat: Essential Tips and Techniques

Along these same lines, you should include the provision that you will be given the opportunity to resolve any final inspection problems within a certain amount of time. Here is a sample of a final inspection provision.

“At the time of closing, the buyer has the right to conduct a final inspection of the boat to determine that the boat is in the same condition as it was when the deposit was paid. If any undisputed newly developed problems are discovered during the final inspection, the buyer will bring them to the seller’s attention. The seller can then elect to resolve the problem within 15 days, or void the sales agreement.”

Mechanical Inspection

The buyer may want to have a marine mechanic come and check out the engine and drive system. This is usually not a troublesome issue, requiring about an hour or two of a marine mechanic’s time.

Your main concern here is that the mechanic doesn’t do anything to your boat that you don’t approve of. Therefore, make sure you are present while the mechanic is performing his inspection. It is also a good idea for you to make arrangements to obtain a copy of whatever report the mechanic prepares for the buyer, so you know what is being said about your boat and have the opportunity to dispute anything in the mechanic’s report that you don’t agree with.

Mechanical inspections shouldn’t be a difficult area for sellers. Working marine mechanics see systems like yours every day and tend to be well grounded in facts and the realities of recreational boats.

Marine Survey

The prudent boat seller will never be heard to utter the consecutive syllables “sur” and “vey” within earshot of a buyer. In fact, the prudent seller should avoid using even similar sounding words, like, say, “surveillance”, “surrey”, “sorbet”, or “purvey” during this critical phase of the deal.

In theory, marine surveyors perform a valuable service for the buyer by conducting an objective inspection of the boat and delivering a factual report detailing any items found that require maintenance or repair (an insurance survey is a valuation for an insurance company, and is performed by a state licensed, regulated insurance professional). Regretfully, the reality of the standard of practice of the marine surveying profession leaves a lot to be desired, and as a boat seller, if you aren’t careful you could easily find yourself victimized by one of the not-so-professional marine surveyors out there.

Part of the problem is the reality of the recreational boat market. A marine expert with a degree in marine engineering or naval architecture, or a marine tradesman with marine propulsion or electrical system certification will normally not be willing to sit around waiting for a boat buyer to call and offer $200 to inspect a used cabin cruiser. Except for retirees, people with these credentials will be fully utilized in one of the lucrative commercial, industrial or military segments of the marine industry.

As a result, many of the marine surveyors serving the recreational boat market are not particularly knowledgeable. The important distinction between measurable, objective fact and conjecture, rank speculation and mere opinion is often lost among practitioners. Therefore a marine survey can turn into a big problem for a boat seller, even if the boat is in reasonable condition and fairly represented. Marine surveyors are a negative lot. They tend to want to try and impress the buyer with how many problems they can find in order to justify the expense of their service. It is a very rare marine surveyor who will report the following.

No significant problems were found with the vessel. Everything was found to be fully operational, shipshape, tight and dry. The very few flaws discovered are either cosmetic in nature, or fall within the range of expected wear and tear consistent with the age and reported use of the vessel.

Regretfully some marine surveyor’s reports contain statements of unsupported opinion, speculation, subjective judgments, and boat lore.

Then there is that other little trick that some marine surveyors will pull on boat sellers. Suppose “Barnacle Bob” is a combination boat salesman and “expert” marine surveyor. A lot of buyers are quite impressed when the boat salesman’s business card lists the “XYZ Marine Surveyor” credential. But if you think about it, these dual roles will in many cases make it difficult if not impossible for Bob to be truly objective.

Lest you get the impression that I am completely against marine surveyors, let me say that an honest, competent surveyor performs a valuable service for a buyer, and will treat the seller fairly as well. It’s just that without the benefit of experience, you can’t tell the different between the honest, competent surveyors in the recreational boat market and the Barnacle Bobs who have 30 years experience hanging around the waterfront.

Therefore, if the buyer requires a survey to buy the boat, you need to look into a few important issues ahead of time to protect both yourself and your boat from harm. First, call the surveyor on the telephone, or interview him in person prior to the actual inspection. Use the form at the end of the chapter to ensure that you cover all the important issues. You should disqualify surveyors who fall into the following categories:

1. Persons who refuse to document their identity with a driver’s license or other official identification.
2. Persons who are not certified by one of the two major Marine Surveyor trade associations, NAMS or SAMS.
3. Persons who are also engaged in the selling of boats, or any other service or equipment they may recommend as a result of the survey findings. This is a clear conflict of interest.
4. Persons who do not provide evidence of liability insurance.

Second, as was the case with a mechanic’s inspection, the surveyor must agree to furnish you with a copy of his report. Hopefully, he will also agree to preview his preliminary notes with you to work out any points of disagreement before he issues his final report. Certainly he should furnish you with a copy of this report no later than the time he delivers the report to the buyer. This is the only way you are going to have an opportunity to challenge any incorrect or otherwise unfair statements the surveyor might make.

Third, you have to require that the buyer and his surveyor agree there will be no destructive tests performed on your boat. No exceptions. You can’t allow surveyors to inflict damage on your boat, no matter how slight. No drilling, punching, gouging, digging or poking allowed. Also, no smoking on board, no drinking, no cussing, no spitting, etc.

Fourth, the buyer will have to agree to bear the ultimate responsibility for any damage the surveyor inflicts upon the boat. The buyer can hold the surveyor responsible, and the surveyor should have liability insurance, just like all contractors and tradesmen. Your business arrangement is with the buyer, and that is where you will turn if there is a problem. You will, of course, be in possession of the buyer’s deposit during the survey. The existence of a survey provision in your agreement with the buyer will dictate that you collect a larger deposit, to cover any potential damage done to your boat by the surveyor.

Finally, you must insist upon being present during the survey inspection. Stay with the surveyor and be prepared to stop him from doing something to your boat that you do not approve of.

Bottom Inspection

The buyer may very well want to inspect the bottom of the boat before closing the deal. This is not a problem for trailerable boats. Even if you do not have a trailer of your own, you can always borrow or rent one to pull the boat out of the water so the buyer can inspect the bottom of the hull to his satisfaction before closing the deal.

For larger boats, it gets a little more complicated. But there are several options you can go with in order to satisfy the seller’s concerns.

Some boat yards have marine hoists that pick up large vessels. You may be able to make arrangements for the bottom inspection to be completed while the boat is in the hoist at the boat yard ramp. Otherwise you will need the yard to store your boat on stands until the hull inspection is completed.

However you choose to get your boat out of the water, the buyer will be the one paying to have the boat hauled out for his inspection. And since the buyer will be the one hiring the haul-out contractor, the buyer will be the responsible party if anything goes wrong. It is a good idea for both you and the buyer to reassure yourselves of the expertise, reputation and insurance coverage of the contractor before you let him pick up your boat. If there are any types of damage excluded from the contractor’s insurance, have the buyer agree to accept responsibility for the excluded damage. The buyer’s deposit should be large enough to cover any uninsured incidental damage that may occur to your boat during the haul out.

Another option is to consider a bottom inspection by one of those companies that employ divers to do cleaning and repair jobs while the boat is in the water. Some of these companies offer hull inspection services that include underwater photographs. First they will clean the boat off so they can see and feel any blisters or bulges. Then they will perform a careful inch-by-inch inspection of the hull from stem to stern. Generally, this service is easier to arrange than a haul out and carries less expense and risk.

If you do decide to have your boat hauled out for a buyer’s inspection, arrange for that to be the very last item in the deal. Be sure to complete the sea trial beforehand, if it is called for. That way when the boat is in the boatyard and the final inspection over, you can simply collect the balance of the buyer’s payment and hand over the title. Another advantage of having the buyer take possession of the boat in the boatyard at the end of the deal is that it allows him the opportunity to have any repairs or modifications he might want to make to the boat completed before the boat is launched.

Sea Trial

Sometimes when selling larger boats, a sea trial will conclude the deal. When this is the case, it will be the last thing to be done, except as previously noted with regard to the bottom inspection. That way, if there are no problems you can complete the deal as soon as you return to the dock.

If a boat fails the sea trial, it is pretty serious. If you are lucky, the buyer might give you a chance to remedy the problem and schedule another trial. On the other hand, you had plenty of time and notice to prepare the boat for the sea trial, and if the boat fails, the buyer has every right to collect his deposit and walk.

The point here is a simple one: if the buyer asks for a sea trial and you agree to it, you should do your best to make sure that the boat is in condition to pass.

Deposit

You have to get a deposit from the buyer. Without a deposit, all your negotiations and discussions will have amounted to little more than a nice afternoon spent talking about your boat. The deposit proves that at the time the agreement was made and signed, the buyer was serious enough to put his money on the table. It also has the effect of locking the buyer into the deal. Almost everyone tends to have second thoughts, after a deal is made. When the buyer has paid a deposit, though, he knows he is committed, which will help control the urge to revisit that decision. Even a small deposit of $100 or $200 will have this effect.

You collect the deposit at the time the deal is signed. There is no point in signing the written agreement unless the buyer is willing to put down some money. If the buyer does not have the entire deposit amount at the time, you can accept a partial payment. He then can return in the near future with the balance of the agreed deposit amount in order to move the deal along.

How Much?

What constitutes a significant deposit? Five percent of the purchase price is usually enough, but if the buyer has requested some provisions to the deal that put your boat at risk, get a large enough deposit to cover your potential losses. Usually you stop advertising when you have a signed deal, so get a large enough deposit to cover the cost of restarting ads and re-establishing the boat on the market. If the buyer has requested a survey or a haul out, get a large enough deposit to cover the expense and any uninsured damage that may occur during those events. If the buyer has requested that you make a repair or modification to the boat prior to closing, get a large enough deposit to cover the expenses that you anticipate will be incurred in fulfilling the buyer’s request.

As a general guide, to decide how large of a deposit to collect, consider where you will stand financially if the buyer backs out of the deal at any point. You should have your expenses covered in every eventuality.

Write Down the Deal and Collect the Deposit

Once you and the buyer have worked out the terms of your agreement, write them down on paper, creating the boat sale agreement. Writing it out by hand is fine, as long as it is legible. You can use the sample form in Prepare the Boat for the New Owner“Step-by-Step Guide on How to Prepare the Yacht for Sale” as a guide, or you can draft your own. In the latter case, be sure your sales agreement contains all of the following elements:

1. Date of the agreement (the date you sign it and take a deposit).
2. Name and address of the buyer and seller.
3. Identification of what is being sold (boat description with identifying numbers).
4. Sales price.
5. Deposit amount collected.
6. Balance due at closing and acceptable payment type.
7. Closing date.
8. “As-is” clause.
9. Buyer’s additional provisions (inspection, sea trial, etc.).

Draw the agreement up on a ruled pad or type it out on your computer and print it, but don’t spend too much time getting it done. Sign and date your signature, get the buyer to sign and date his signature and then put that deposit in your pocket. Congratulations!

Be sure the buyer gets a copy of the signed agreement before he leaves. You can either create and sign two identical original agreements, or you can use good old, low-tech carbon paper if you are drawing the agreement up in longhand. One way or another, be sure the buyer has a copy of the agreement in hand when he leaves to help prevent misunderstandings.

Refunds

When do you refund the deposit? And when do you keep it?

If you default on the deal, you have to refund the deposit. Maybe your boat was stolen or damaged before you could close the deal. It’s only fair in those cases for you to give the buyer his deposit back and let him go pick out another boat. The same is true if your boat fails a final inspection or a sea trial, or if the marine survey discovers an indisputable and significant problem that the buyer was not previously aware of.

Sometimes, the buyer will experience a crisis in his personal life so that he is no longer willing or able to buy the boat. If that is the case, and you are sure of the facts, I recommend that you refund the deposit in this kind of situation as well.

Suppose, however, that the surveyor writes a report that, while not pointing out any specific serious problems, has a negative tone that gives the buyer the willies. In that case, try to calm the buyer down. Take each item in the report not supported by objective fact and point this out to the buyer. If something in the report is speculation or guesswork, say so. If something in the report is untrue, go to the trouble to establish the falsehood of the surveyor’s statement for the buyer’s benefit. Take the buyer for a boat ride if possible, demonstrating to him once again that the boat is a great boat that is ready to be taken out and enjoyed. Ultimately, unless there is a substantial issue raised by the surveyor that was not previously revealed to the buyer, I would be reluctant to refund the deposit.

Along these same lines, suppose the buyer comes around with some weak excuse for why he wants out of the deal. You’ve cancelled you ads, and maybe incurred some expenses on his behalf to prepare for the closing. You have several options in this case:

1. Show him what your expenses are and give him back his deposit, after deducting your actual expenses.
2. Go over the business about your expenses, but also charge him for your time and trouble and the costs you will incur trying to reestablish your boat in the market. Give him back a part of his deposit, in the form of a check, so that you have some proof. Mark the memo line of the check as “Deposit Refund – Final”.
3. Tell the buyer he made a deal and he is obligated to buy your boat and you are going to keep his deposit if he doesn’t finish the deal. You are technically correct in doing this, but you may be courting some trouble. The guy knows where you keep your boat, after all.

In any event, always cover any direct costs you incurred in the deal, your true, out-of-pocket expenses, things you have actually paid for or charged to your credit cards. The point here is that you should not lose money because a buyer backs out of the deal.

Closing the Deal

Let the buyer know ahead of time the forms of payment that will be acceptable at closing, and allow him sufficient time to make the necessary arrangements. Secure forms of payment are cashier’s or certified checks from a known banking institution, a bank wire transfer or cash.

Unfortunately, a recent scam perpetrated around the country involved the use of fake cashier’s checks and certified checks. If you have a concern about the veracity of the buyer’s certified check, schedule the closing to occur during a business day and call the issuing bank with the details from the buyer’s check. The bank can verify the authenticity of the buyer’s check over the telephone before you hand over the title and possession of the boat to the buyer.

Wire transfers, on the other hand, offer the benefits of being fast and certain, although they include fees that range from $10 to $30.

Money orders are usually not sufficiently large to close a deal on a boat. Besides, so many different companies issue them now that it may be impossible for a layman to spot a forgery.

Of course, if the transaction isn’t too big, you can simply ask the buyer to bring cash to close the deal.

Recap

Well, there you have it. Just to review, here are the high points, one more time:

• Don’t lie, but at the same time, you don’t have to reveal everything you know either. Boat selling is not a time for confession.
• Get the buyer to make some kind of an offer to open negotiations.
• Don’t lower your price unless you are absolutely sure it will clinch the deal.
• Get a deposit. Take whatever the buyer has in his pocket and write up the deal. You can get more money on deposit later.
• Put the deal on paper, date it and get it signed. Be sure the buyer takes a copy when he leaves.

Author

Olga Nesvetailova

Freelancer

Literature

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